China Cosmetics 2Q/1H26 Outlook: Revenue Momentum Improves, Online Margins Under Pressure, Valuation Multiples Compressed

Overview

This report is Goldman Sachs’ 2Q26/1H26 earnings outlook and valuation update for Chinese cosmetics coverage companies. Despite weak 1Q26 conditions, most covered companies showed some acceleration in income in 2Q26, mainly driven by online sales, same-store growth in offline counters, stabilization in core brands, and volume increases in emerging brands. Margin performance, however, was mixed: heightened online channel competition, weaker macro conditions, and high comparables have weakened online margin trends. Some companies are offsetting this through offline counter efficiency, pricing actions, pre-emptive marketing spend, and operating efficiency improvements.

Core views

Core views include: first, Mao Geping and Forest Cabin are the strongest growers, with 1H26 expected to be up about +28% and +39% year-over-year, respectively; second, Shanghai Jahwa, Botanee, and Proya are expected in 2Q26 to grow around +14%, +10%, and +1%, improving from 1Q26; third, despite high comparables Giant Biogene is expected to see 1H26 sales down about -7% year-over-year, but the full-year target remains on track; fourth, Bloomage is expected to decline about -18% year-over-year and remains under pressure; fifth, although earnings assumptions were only modestly revised, valuation multiple compression has led to a clear reduction in target prices.

Analysis framework

The report conducts a peer comparison across covered names using company earnings previews, Goldman Sachs Douyin daily tracking, 618 sales performance, online and offline channel assumptions, brand-mix changes, valuation-multiple resets, and updates to 2026-2028E earnings forecasts.

Methodology notes

• Valuation framework2027E P/E Discounted Target Price

  Use the target exit P/E multiple multiplied by 2027E earnings and discounted back to year-end 2026 to derive a 12-month target price.

  Proya uses 17x 2027E P/E, Giant Biogene uses 17x, Botanee uses 20x, Shanghai Jahwa uses 24x, Bloomage uses 22x, Mao Geping uses 21x, and Forest Cabin uses 16x.

• Industry multipleCosmetics Base Multiple and Medical Beauty Multiple

  The cosmetics base multiple is reduced to 20x, with medical beauty PE set at 22x.

  A cosmetics 20x is close to the -1 standard deviation of the 2018-2026 coverage set, used to reflect increased competition and reduced earnings visibility; 22x for medical beauty is based on the lower-band PEs in the industry from Jan 2025 to Jul 2026.

• High-frequency dataDouyin Daily Tracking

  Use year-over-year changes in brand GMV on Douyin to monitor online sales momentum.

  As of July 10, 2026, Jul-to-date tracking shows most domestic brands still with double-digit growth, but off-season fluctuations are sizable.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Mao Geping Cosmetics Co. (1318.HK)

  Covered company, Buy rating

  Strengths

  Strong 618 growth, balanced channel execution, and high-growth profile support a 30% valuation premium.

  Weaknesses

  Valuation multiple was reduced from 28x to 21x, and the target price was cut from HK$106 to HK$78.

  Comparison

  Expected growth is the highest in coverage, with 47.2% upside to target.

  Risks

  Penetration of mid-to-high-end Chinese cosmetics below expectation, rising marketing costs, and intensifying competition from overseas premium brands.

• Shanghai Forest Cabin Cosmetics (2657.HK)

  Covered company, Buy rating

  Strengths

  Product upgrades, offline counter efficiency, and online growth are jointly driving performance, with strong expected 1H26 growth.

  Weaknesses

  A rising share of online sales may dilute margins, and the target multiple was reduced from 22x to 16x.

  Comparison

  73% upside; the largest implied upside in target price among covered names in this report.

  Risks

  Underperformance of anti-aging product penetration, underwhelming oil-segment adoption, margin dilution from online reach, intensified competition and promotions, and high category concentration.

• Giant Biogene Holding (2367.HK)

  Covered company, Buy rating

  Strengths

  618 recovery supports the full-year growth guide, and a blended medical beauty/cosmetics valuation framework provides support.

  Weaknesses

  1H26 sales are expected to decline year-over-year due to a high base, and online net margin is expected to contract year-over-year.

  Comparison

  Target price HK$34 with 28.2% upside; valuation multiple cut from 22x to 17x.

  Risks

  Professional skincare market growth below expectation, intensifying competition, product development misses, and regulatory risk.

• Shanghai Jahwa United (600315.SS)

  Covered company, Buy rating

  Strengths

  Improving operating efficiency, growth in Dr. Yu and Herborist brands, and expected margin recovery support a recovery path.

  Weaknesses

  Overseas impairment, losses at offline stores, and management transition remain sources of pressure.

  Comparison

  Target price Rmb21, upside 19.9%, valuation multiple reduced from 30x to 24x.

  Risks

  Overseas demand contraction and competition causing impairments, Herborist store closures, Dr. Yu/ViVE sales below expectation, insufficient online execution, and management changes.

• Proya Cosmetics (603605.SS)

  Covered company, Neutral rating

  Strengths

  Core and new brands show signs of stabilizing and improving, and target multiple discount narrowed from 30% to 15%.

  Weaknesses

  The 2Q26 outlook is relatively soft, with high selling expenses; A-H dual listing could add dilution and margin pressure.

  Comparison

  Target price Rmb62, upside 10.4%, relatively less attractive than Buy-rated names.

  Risks

  Core Proya new-product development, intensity of competition, speed of new-brand ramp-up, and operating margin volatility from high selling expenses.

• Botanee Biotech (300957.SZ)

  Covered company, Neutral rating

  Strengths

  Sales of non-core brands have accelerated, with 2026-2028E net profit forecasts raised by 2%-4%.

  Weaknesses

  Valuation is nearing fairness, and target multiple was reduced from 27x to 20x.

  Comparison

  Target price Rmb32.30, upside 4.5%, with relatively balanced risk-reward.

  Risks

  Skincare-category penetration, market share shifts, contribution from non-skincare categories, contribution from new brands, A&P intensity.

• Bloomage Biotechnology (688363.SS)

  Covered company, Sell rating

  Strengths

  There is upside risk if skincare recovers, cosmetics demand improves, or expense ratio declines faster than expected.

  Weaknesses

  Sales remain under pressure; the report expects year-over-year decline of -18%, and the Sell rating is maintained.

  Comparison

  Target price Rmb25, implying about 26.9% downside versus the current price.

  Risks

  Skincare recovery faster than expected, cosmetics demand stronger than expected, competition easing, and expense ratio declining faster than expected.

Key data

• Mao Geping 1H26 sales outlook+28% yoyThe report says it is expected to lead growth among the coverage set.
• Forest Cabin 1H26 sales outlook+39% yoyThe report says it is co-leading with Mao Geping.
• Giant Biogene 1H26 sales outlook-7% yoyMainly affected by a high base, but full-year outlook remains on track.
• Bloomage sales outlook-18% yoyThe report expects it to remain under pressure.
• Target price revision range-10% to -27%Primarily driven by valuation multiple compression.
• Proya target priceRmb62Maintain Neutral; upside to target 10.4%.
• Giant Biogene target priceHK$34Maintain Buy; upside to target 28.2%.
• Botanee target priceRmb32.30Maintain Neutral; upside to target 4.5%.
• Shanghai Jahwa target priceRmb21Maintain Buy; upside to target 19.9%.
• Bloomage target priceRmb25Maintain Sell; downside to target about 26.9%.
• Mao Geping target priceHK$78Maintain Buy; upside to target 47.2%.
• Forest Cabin target priceHK$76Maintain Buy; upside to target 73%.

Impact & implications

The investment implication is that the coverage group’s improving revenue momentum does not automatically translate into a broad margin recovery. Goldman Sachs remains most constructive on Mao Geping, Giant Biogene, Forest Cabin, and Shanghai Jahwa, which have stronger brand momentum and clearer paths through improving offline efficiency or recovery. It remains cautious on Proya and Botanee, waiting for further validation from new products, new brands, and margins; it remains negative on Bloomage.

Risks

• Online competition intensifies, causing further decline in ad efficiency and margins.
• Weak macro consumption and high comparables in 2H26 may suppress the sustainability of sales growth.
• New products, new brands, and multi-brand scaling may grow slower than expected.
• Offline counter efficiency improvements may not be enough to offset online margin pressure.
• Further valuation multiple compression may continue to pressure target prices.
• Regulatory, product development, and medical beauty-related risks may affect companies such as Giant Biogene and Bloomage.

What to watch

• Whether actual 2Q26 and 1H26 results validate the revenue acceleration.
• Jul-to-date and subsequent Douyin GMV year-over-year trends, especially off-season volatility and MNC brand competition.
• Mao Geping and Forest Cabin same-store growth and counter efficiency.
• Performance of core and emerging brands including Proya, Botanee, Winona, Dr. Yu, and Herborist.
• Online channel net margins, selling expense ratio, and A&P intensity.
• Execution pace of 2H26 new products, new business lines, and omni-channel expansion.